Graphite is key to our sustainable future, so why is this graphite miner so undervalued?

When you think of the items that power your home, graphite probably isn’t the first thing that comes to mind. However, graphite is a key component in several everyday items that we all rely upon, such as vacuums, bikes, solar power panels and power tools. But graphite’s appeal is moving well beyond your home; it’s going global.

Despite being crucial in several military technologies, perhaps its most important modern application is in the Lithium-Ion batteries, which power electric vehicles. Electric vehicles are what has made graphite famous in terms of its applications for modern technologies and the recognition it has received as a key ingredient in these batteries has somewhat lagged behind substances like lithium. The batteries themselves however, contain a nickel/lithium cathode and a graphite anode, with each battery requiring between ten and twenty times more graphite than lithium.

This exact discrepancy led Elon Musk to comment “Our cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide, [there’s] a little bit of lithium in there, but it’s like the salt on the salad.”

For their part, Tesla are presently considering a lithium-ion battery ‘giga-factory’ that could require as much as 112,500 tonnes of high-grade flake graphite every year. Tesla are by no means the only company that have big plans that are going to require a large, reliable supply of graphite though. Northvole, a Scandinavian company, has similar ambitions to build a plant in Sweden. However the most notable entrants into the market have been the companies considered to be household names, who are looking to make inroads into the li-ion battery market.

These include Dyson, which has announced that it will invest £1 billion (AUD$1.8 billion) into lithium battery technology in the coming years, alongside LG, which recently revealed that it is investing half a billion dollars (USD) into its Polish factory to increase its output to 70 GWh per year. Car manufacturers are naturally also looking to move with the times, with General Motors planning to have 20 different electric vehicle models available to purchase by 2023 and Renault, who will double their EV offering in the next five years.

In the Asian markets, Panasonic and Toyota announced late last month that they were partnering to create a lithium battery joint venture, which will assist Toyota in reaching its aim to sell 5.5 million electric vehicles every year by 2030. The plants created by the venture will also fulfill EV battery demand for Mazda, Subaru, Daihatsu, and is aimed at encouraging Honda to follow suit as well.

Naturally it follows, that all of this demand from all corners of the globe will need to be serviced by someone. Presently, China controls around 65% of the world’s graphite production, but this is due to change. Companies are seeking a more diversified source of graphite, less susceptible to political upheaval, yet wish to retain the cost advantages that China provides. Africa is providing a viable alternative, even though concerns about the political stability in the region have always loomed. Fortunately, BlackEarth Minerals (BEM) have a large deposit of graphite situated in Madagascar, one of the most stable countries in the region, according to Mining Journal’s World Risk Report.

A recently completed independent scoping study valued BlackEarth’s Maniry Graphite Project at $107 million USD, more than 13 times BlackEarth’s current market capitalisation. Given the forecasted demand for the substance, and the trend of modern technologies, a company with a significant quantity of graphite in a secure country outside of China would seem like an opportunity to invest in the future.  

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BlackEarth Minerals trades under the ASX code: ‘BEM’

More information on BlackEarth Minerals can be found at their Investor Centre.

*Reach Markets are paid a retainer to assist BEM with private investor management.